Own or Rent Your GP Surgery: What Each Choice Costs in Tax

Own the surgery if the partnership can fund it and wants the building in partners' hands; rent it if capital, flexibility and recruitment matter more.

Owning a £600,000 freehold in England or Northern Ireland costs £19,500 in stamp duty land tax (SDLT), the tax on buying land and buildings. It then opens capital allowances on the fixtures and on the structure, and it ends in a capital gains tax bill. Renting costs you none of that and builds you nothing.

Should your partnership own the surgery or rent it?

Renting takes one of two forms. The first is a commercial lease from a private landlord or a developer, where you are a tenant and the rent you pay is reimbursed to you under the NHS premises schemes. The second is occupying NHS Property Services or other NHS-owned premises, where the commercial terms differ but your position does not: you occupy, you are reimbursed, and you own no asset.

Owning puts the building in partners' hands and puts an income stream against the loan. An owner-occupier practice is paid notional rent for its premises, and that is the income that services the borrowing, with the detail on the notional rent guide. Interest on the property loan is deductible against that income.

What you are really choosing between is a fixed occupancy cost and a leveraged asset. The table below sets the two limbs side by side.

Owning versus renting a GP surgery, on the tax rules in force for 2026/27

Factor	Renting (third party or NHS estate)	Owning (usually via a property partnership or LLP)
Capital outlay	None	Deposit plus a purchase or development loan
SDLT	Possible charge on the lease NPV, often nil	0% to 5% on the freehold price, banded
NHS premises income	Your rent is reimbursed to you	Reimbursement is paid to the owning partners
Loan interest	Not applicable	Deductible against the premises income
Capital allowances	Your own fit-out only	Fixtures, integral features and the structure
Asset growth	None to the partners	The owning partners build an asset
Joining and leaving	No premises buy-in	A premises buy-in, and a buy-out to fund on exit
Tax on the way out	None, nothing is owned	Capital gains tax, with BADR possible but conditional

Why is a surgery usually held in a property partnership or LLP?

The common structure is to hold the premises in a separate property partnership or LLP, outside the medical partnership. The property vehicle owns the freehold or the leasehold interest, the medical partnership occupies the building and runs the practice, and the premises income and its loan interest sit together in one place.

Separating the vehicle buys you several things. Premises risk is ring-fenced away from the clinical partnership. A clinician can join the medical partnership without also buying into the building. And the ownership of the property can be shared out differently from the clinical profit shares, which is what makes the recruitment point below workable.

Between a general property partnership and an LLP, the LLP gives limited liability and separate legal personality, with members taxed personally on their shares much as partners are. The SDLT and capital gains consequences of moving a building into or out of each vehicle differ, and they turn on the partners' shares and on timing, so settle the vehicle at the outset with specific advice.

What SDLT do you pay when the partnership buys the surgery?

Buying a surgery freehold is a non-residential purchase, so it is taxed on the commercial bands and not on the residential ones. The bands are sliced, so each portion of the price is taxed at its own rate.

Non residential SDLT rates, England and Northern Ireland, in force for 2026/27

Portion of the price	Rate
Up to £150,000	0%
£150,001 to £250,000	2%
Above £250,000	5%

Take Dr B's partnership, buying its surgery freehold for £600,000 in 2026/27. The first £150,000 is free. The next £100,000, up to £250,000, is charged at 2%, which is £2,000.

The remaining £350,000 is charged at 5%, which is £17,500. The SDLT is £19,500, and the return and the payment are due within 14 days of completion.

That price is illustrative, and any real figure would come from a valuation. Move the price and only the top slice changes, so £700,000 would cost £5,000 more.

The non-residential SDLT rates apply to a purely commercial building. A surgery physically connected to a flat or a house is a mixed property, which gov.uk gives as one of its own examples of that, and mixed property is taxed on the same commercial table. The 14-day deadline runs from completion whether or not anyone has told you the figure.

What SDLT applies to a new surgery lease?

A new non-residential lease is charged on the net present value (NPV) of the rent over the term, which is the future rent discounted back to today's money. Any lease premium you pay is charged separately on the purchase bands above. The NPV bands are nil up to £150,000, 1% from £150,001 to £5,000,000, and 2% above £5,000,000.

Because the NPV is not the annual rent multiplied by the term, many surgery leases land under £150,000 and pay nothing on the rent. Run the calculation before you assume it, and check separately whether a return is due at all, because nil tax and no return are not the same test.

A new lease of less than 7 years is not notifiable where the chargeable consideration stays under the £150,000 non-residential threshold, so a surgery lease with an NPV under that figure and no premium needs no return. A new lease of 7 years or more is also outside the return where the premium is under £40,000 and the annual rent under £1,000. Where the lease runs 7 years or more and the rent is £1,000 or more, the return is filed even though the tax is nil. A later extension of the term or an increase in the rent under the lease can pull a further charge into scope.

Do the SDLT bands apply in Scotland and Wales?

No. SDLT covers England and Northern Ireland only. A surgery in Scotland is charged to Land and Buildings Transaction Tax (LBTT), and one in Wales to Land Transaction Tax (LTT).

LBTT and LTT have their own rates and bands, which do not match the SDLT figures above, so cost a Scottish or Welsh transaction on the devolved tables. No devolved rate is quoted here, because the point is that the bands above do not apply to you.

What happens when the building moves into or out of the partnership?

Special SDLT rules apply to transfers of property into or out of a partnership, including a sum-of-lower-proportions calculation that reduces or alters the charge according to how the partners' shares line up before and after. The ordinary purchase bands do not simply apply. These rules are genuinely intricate and expensive to get wrong, so take specific advice before any transfer instead of pricing it off the table above.

What capital allowances property owners miss on a surgery purchase

Anyone with an interest in the building can claim: a freeholder, a leaseholder, and a tenant on its own fit-out. That last one matters to the decision, because a practice that rents still claims allowances on the equipment and fit-out it pays for itself, even though it will never own the walls.

Inside the building the spend splits. Integral features, meaning the electrical, heating, ventilation, air conditioning, cold and hot water systems and lifts that are part of the fabric, go into the special-rate pool. General plant and machinery in a fit-out goes into the main-rate pool. On a purpose-built or heavily fitted surgery the integral features are a large slice of the cost, so identifying them is worth real money.

Capital allowance rates on surgery spend, 2026/27

Spend	Where it goes	Relief
Qualifying plant and machinery, first £1,000,000 a year	Either pool	Annual Investment Allowance, 100%
New and unused main-rate plant, from 1 January 2026	Main-rate pool	40% first-year allowance
Other general plant	Main-rate pool	14% writing-down allowance
Integral features and fixtures	Special-rate pool	6% writing-down allowance
The structure itself, contracts signed on or after 29 October 2018	Neither pool	3% straight line

The Annual Investment Allowance (AIA) of £1,000,000 a year gives 100% relief. Point it at the special-rate items first, because those would otherwise unwind at 6% a year.

The main-rate writing-down allowance is 14%, cut from 18% by Finance Act 2026 section 28. That took effect on 1 April 2026 for corporation tax and 6 April 2026 for income tax, and a period straddling those dates uses a hybrid, time-apportioned rate. The special-rate pool stays at 6%.

On new plant there is a further choice. A 40% first-year allowance applies from 1 January 2026 under Finance Act 2026 section 29, to new and unused assets only, so a second-hand item does not qualify. Full expensing and the 50% first-year allowance on new special-rate plant are companies only, which means a property partnership or LLP holding your surgery cannot use either and AIA remains its main lever.

Can you claim on the structure of the building?

Yes, and this is the part most practices are told they cannot have. Plant and machinery allowances do not touch the bricks and mortar, but structures and buildings allowance does, at 3% a year on a straight-line basis over an allowance period of 33 and one third years. It applies where all the construction contracts were signed on or after 29 October 2018, so it reaches a new-build surgery but not an older one.

The conditions are narrow. The structure must not have been used as a residence, and you need a written allowance statement for it, which the first user has to create before anyone can claim.

The catch comes on the exit. The total structures and buildings allowance you have claimed is added to your disposal proceeds when you sell, so it increases the gain and the capital gains tax on it. The relief is real and on a long hold it is worth having, but part of it is a deferral and should be modelled that way.

What is a section 198 election, and why is its deadline fatal?

When you buy premises that already contain fixtures, a CAA 2001 s.198 election is the joint notice by which you and the seller fix the value attributed to those fixtures. That agreed figure is what governs the allowances you can claim from then on. Without it, the allowances that came with the building can be lost completely, which is the single most expensive avoidable outcome on a surgery purchase.

The fixed-value requirement sits behind the election: the agreed figure binds both sides and cannot exceed the seller's original qualifying expenditure on those fixtures. It is an agreement about how an existing pool passes across, not a free hand to pick a number.

The pooling requirement, in CAA 2001 s.187A, is the other half. The seller must have brought the fixtures into a pool before the transfer for you to claim at all, so the seller's own position has to be checked as part of your purchase.

The deadline is where practices lose the money. CAA 2001 s.201 gives a strict 2-year limit: the s.198 election must be made by notice no later than 2 years after you acquire the interest, and there is no second chance afterwards.

The figure itself is a commercial negotiation. A higher value gives you more allowances while it can raise a balancing charge on the seller, which is a claw-back of relief the seller has already had. So an s198 point belongs in the pre-contract enquiries and in the price discussion, which is why an accountant should be involved before completion and not after it.

Where the seller is a body that pays no tax, such as an NHS organisation or a charity, the negotiation looks different because the seller has nothing to claw back. The election still matters to you.

What if the practice already owns its surgery?

The 2-year limit above attaches to a transaction. It does not stop a partnership that has owned its surgery for fifteen years, and never had a survey, from identifying qualifying integral features inside the original cost and claiming on them in a current return. Most owner-occupier practices have never had that exercise done. Do it while you still own the building, because a disposal closes the door.

What does owning the surgery do to each partner's position?

Ownership adds a premises buy-in for anyone joining and a premises buy-out to fund for anyone leaving, on top of the ordinary working-capital position. Both are valued on the building, not on the annual accounts, and partners commonly hold the premises in different proportions from their profit shares. Where an exit is not funded, the building concentrates on whoever remains, and the buy-in, buy-out, valuation and concentration questions are all worked through on the last man standing guide.

A partner's premises stake sits in the partnership capital account, and how capital accounts work is set out in the GP partnership tax guide.

What tax do you pay when the surgery is sold?

When the premises, or one partner's share of them, is sold for more than cost, capital gains tax applies to the gain, and each owner is taxed on their own slice. A GP practice for sale changes hands on its tangible assets, any owned premises and any private goodwill, because NHS GP goodwill cannot be sold. The building is therefore the largest single number in most GP transactions.

Timing is a lever, so get it right deliberately. The date of disposal for capital gains tax is the contract date where the contract is unconditional, which means exchange rather than completion. Where a sale is genuinely conditional on a third party's consent, the disposal is dated when that condition is met.

Business Asset Disposal Relief rate by date of disposal, £1,000,000 lifetime limit per individual

Date of disposal	BADR rate
From 6 April 2026 (current)	18%
Earlier disposals	14% in 2025/26, 10% before 6 April 2025

Business Asset Disposal Relief (BADR) reduces the capital gains tax rate on a qualifying disposal, and the current rate is 18%, within a £1,000,000 lifetime limit per individual and with the qualifying conditions met throughout the 2 years to disposal. It is not a premises relief by default. Where the building sits outside the trading partnership, it normally reaches BADR as an associated disposal, made alongside a genuine withdrawal from the partnership itself.

Charging rent and claiming BADR pull against each other. An associated disposal is restricted where rent was charged for the partnership's use of the premises, so the arrangement that made ownership pay for twenty years can cut the relief on the sale that ends it.

Add back any structures and buildings allowance claimed, and the gap between the expected tax and the actual tax widens again. Model both when you commit to a structure, not in the month you sell.

What each mistake costs

The six errors that cost GP surgery owners money, and the price of each

Mistake	What it costs
No s.198 election, or the s.201 2-year window missed	The fixtures allowances, permanently
Assuming the structure qualifies for nothing	3% a year of the qualifying construction cost
Never surveying a building you already own	A decade or more of unclaimed integral features
Pricing a Scottish or Welsh purchase on the SDLT bands	A wrong figure: LBTT and LTT rates differ
Using the ordinary bands on a transfer into or out of the partnership	SDLT mispriced, sum-of-lower-proportions ignored
Treating BADR as automatic on a premises disposal	Up to 6 points of CGT on the whole gain

Costing a surgery purchase: SDLT, capital allowances and the exit

The own-versus-rent answer is practice-specific, and it is decided on your own numbers. Those numbers are the SDLT on the price, the allowances the building actually yields, what the borrowing costs against the premises income, and what the exit looks like for the partners who will fund it. The four sit together, and a decision costed on only one of them is usually costed on the wrong one.

For the deductions side of practice spending, see the GP tax deductions guide; for the wider buy-in decision, becoming a GP partner; and where private work is being incorporated, medical practice incorporation. For how we work with GP practices, see our GP services, the rest of our practice management guides, or get in touch.